Johnson Service 'primed' for lockdown easing after weaker 2020

Johnson Service Group reported total revenue for 2020 of £229.8m on Friday, falling from £350.6m year-on-year.

The AIM-traded firm said in its preliminary results that adjusted EBITDA totalled £53.6m for the year ended 31 December, down from £119m, with its adjusted EBITDA margin narrowing to 23.3% from 33.9%.

Its swung to an adjusted loss before tax of £17m, from an adjusted profit before tax of £48.2m in 2019.

Net cash excluding IFRS 16 liabilities at year-end on 31 December totalled £6.6m, compared to net debt of £87.7m at the end of the prior year.

As the board had previously confirmed, no dividend was being declared for 2020 given the impact of the Covid-19 pandemic.

Operationally, Johnson’s workwear business continued to function and service customers throughout the various lockdowns and UK tier restrictions.

A 12% volume reduction in April steadily improved to a 6% reduction in August, the board said, and reached pre-Covid volumes in October.

Customer retention levels were 94% for the year.

Hotel, restaurant and cafe (HoReCa) sites were mothballed where necessary, with production and resourcing curtailed to match customer requirements, as linen volumes fluctuated dramatically.

Johnson said it made use of the Coronavirus Job Retention Scheme (CJRS) to enable continued employment where practicable, and ensuring it had sufficient resources to respond to demand as volumes returned.

It strengthened its balance sheet and liquidity during the year, with increased bank facilities of £175m, and an £82.7m equity placing completed in June.

The board said Johnson’s HoReCa plants were “primed” to ramp-up in response to customer demand, as lockdown restrictions were set to ease in the coming months.

“As anticipated, our 2020 results reflect the dramatic impact that Covid-19 has had on the group, particularly within our HoReCa division,” said chief executive officer Peter Egan.

“However, the decisive actions taken have protected the future of the business, by shoring up the group's balance sheet whilst managing our laundry operations to ensure flexible quality service for our customers.”

Egan said the company was continuing to take proactive actions to adapt its operations, to ensure the group had a “strong platform” from which it could scale from, as higher levels of demand returned.

“We will continue our strategy to invest in our plants in order to maintain our position as a well invested operator, delivering outstanding levels of service to our customers.

“This, combined with our existing scale, ability to flex costs and focus on operational excellence, makes us confident that we will be able to take advantage of growth opportunities as they arise and to increase returns to shareholders over time.”

At 0905 GMT, shares in Johnson Service Group were up 0.81% at 157.86p.